BP Seeks to Halt Some Gulf Oil-Spill Settlement Payments

March 16 (Bloomberg) -- BP Plc asked a judge to halt some
payments under the $8.5 billion Gulf of Mexico oil-spill
settlement, claiming the administrator is misinterpreting
damages claims and increasing the cost to the company.

As a result of policy decisions on certain business
economic-loss claims by court-appointed administrator Patrick
Juneau, “BP is already exposed to hundreds of millions of
dollars in fictitious ‘losses’ that were never contemplated by
the agreement,” London-based BP’s attorneys said in papers
filed yesterday in federal court in New Orleans.

“Although the ultimate exposure is at this time
inestimable, it grows daily and could cost BP billions,” the
lawyers said. BP increased the estimated cost of its settlement
of most economic spill-damage claims from $7.8 billion to $8.5
billion in early February. The accord was reached last year.

U.S. District Judge Carl Barbier, who is presiding over the
non-jury trial of liability for the worst offshore spill in U.S.
history, previously declined to force Juneau to alter his
interpretation of the settlement terms to match BP’s
expectations. The trial concluded its third week of testimony
yesterday and will resume March 18.

BP also sued the Deepwater Horizon Court Supervised
Settlement Program and administrator Juneau in a separate action
yesterday in New Orleans federal court. That action also seeks
to enjoin Juneau’s alleged “misapplication” of the settlement
accord.

Scott Dean, a BP spokesman, had no immediate comment on the
filings. Nick Gagliano, Juneau’s spokesman, said the claims
administrator couldn’t comment as he hasn’t yet reviewed the
filings.

‘Objective Formulas’

“Simply put, BP undervalued the settlement and under-estimated the number of people and businesses that qualify under
the objective formulas that BP agreed to,” attorneys Steve
Herman and Jim Roy, who head the committee representing spill
victims suing BP, said in an e-mailed statement.

BP said Juneau’s “rewriting” stretched the settlement
accord to include claims the oil company “never contemplated”
paying. The company said the “non-existent losses are most
prevalent” in the agriculture, construction, professional
services, real estate, manufacturing, wholesale trade and retail
industries.

BP said it will ask Barbier for a preliminary injunction
blocking payment on any business-loss claim calculated under
Juneau’s disputed interpretation of the settlement accord.

If Barbier refuses that request, BP said it will
alternatively ask him to ban payments on all economic-loss
claims by any businesses in the industries in which BP claims
the fictitious losses have been most prevalent.

‘Flawed Data’

BP said two-thirds of all business economic-loss payments
larger than $75,000 have been based on “flawed data.” The
company also contends that more than 1,200 payments have been
made to claimants in the agriculture, construction and
professional services industries that are too remote from the
area impacted by the spill to qualify for compensation.

Last year’s settlement between BP and lawyers representing
spill-damage victims resolves most economic and medical-injury
claims. That accord doesn’t include damage claims by financial
institutions, casinos and companies claiming harm from the Obama
Administration’s deepwater drilling moratorium, which was
imposed in the wake of the 2010 spill.

The case is In Re: Oil Spill by the Oil Rig Deepwater
Horizon in the Gulf of Mexico on April 20, 2010, MDL-2179, U.S.
District Court, Eastern District of Louisiana (New Orleans).